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Why HR Audits Are Crucial for Compliance and Best Practices

This article discusses the importance of conducting HR audits to ensure compliance with laws and regulations while proactively protecting the organization. Key benefits include identifying and correcting issues, limiting liability, establishing best practices, and aligning HR processes with strategic goals. The article outlines common concerns about HR audits, such as costs and disruptions, and provides a step-by-step guide on the auditing process. Topics covered include wage and hour practices, recruiting, employee forms, and policies. Ongoing monitoring helps maintain improvements.

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Why HR Audits Are Crucial for Compliance and Best Practices

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  1. CENTRAL MINNESOTA SHRM Why An HR Audit Is Necessary October 20, 2011 ByBeth PapacekandJonathon Naples

  2. Why Audit? Compliance – laws and regulations • Proactive protections • Identify and correct • Limit liability • Establish best practices • Identify opportunities for improvement/development • Strategic – do the processes align with goals, strategic plan

  3. Concerns • Expense • Lack of personnel • Disruption to HR function and others • What will come of it? • Create roadmap for litigation

  4. Basic Steps • Determine scope and type • Develop audit checklist/Questionnaire/Key Documents • Collect Data • Analyze/benchmark • Create action plans • Ongoing monitoring and improvement

  5. What to Audit • Wage and Hour Practices • Recruiting Practices • Pre-employment testing • Employee forms • Orientation Training • Restrictive Covenants • Policies/Handbooks

  6. What to Audit • Affirmative Action Plans and Practices • Discrimination/Harassment policies and complaint process • Accommodation Requests • Medical Requests/Exams (GINA) • I-9

  7. What to Audit • Personnel Files/Recordkeeping • Security/Privacy • Performance Management Systems • Pay Plans/Pay Equity – (Ledbetter) • Independent Contractors and Other Non-Employees

  8. What to Audit • LitigationPreparedness • Federal/StatePostings • LeaveManagement • Benefits/Insurance • Payrolltaxaudit • OSH/Safety • Privacy • Union Vulnerability

  9. Wage and Hour PracticesAudit Areas • Exempt/Nonexempt Status • Timekeeping Systems/Recording of Hours • Defining the Workweek/Workday • Wage Deductions • Overtime/Comp Time • Bonus Calculations

  10. Wage and Hour PracticesAudit Areas • Management Practices/Communications • Child Labor • Travel • Training • On-Call • Joint Employer

  11. Wage and Hour Practices Key Documents • Job description • Time records • Written policies re: • Timekeeping • Overtime • Pay Periods • Attendance

  12. Wage and Hour Practices Key Documents Written policies re (cont.): • Meal/Rest breaks • Deductions • Safe harbor • Classification • Travel • Training • Pay at Termination

  13. Wage and Hour Practices Key Documents • Compensation plans • Offer letters • CBA’s

  14. Wage and Hour Practices Other “Keys” • May be unwritten • Informal communication • Manager behavior

  15. Wage and Hour Practices Correcting Issues Found – Retro or Forward Only • Determine scope of issue • Who is impacted? • Dollars involved? • Timeframe for liability • Consult legal counsel

  16. Wage and Hour Practices Correcting Issues Found – Retro or Forward Only • Plan • Timing • Communication • Execution • Documentation • Ongoing monitoring

  17. Policies and Handbooks • Confidentiality Policies • Social Media Policies • Blogging and Internet Usage • Anti-Discrimination & EEO Policies • NLRA Issues • Applicable to both union and non-union employers.

  18. Medical Requests/Exams Audit Areas • Permissible purpose • Scope of inquiry • GINA disclaimer • Confidentiality

  19. Medical Requests/Exams Key Documents • Job descriptions • Pre-employment exam • Drug/alcohol testing policy, consent • FMLA forms • Fitness for Duty • Accommodation requests • Attendance/Absence forms

  20. Non-Employees • Independent Contractors • Interns/Trainees • Volunteers

  21. Non-Employees Key Documents • Contracts • Offer letters • Applicable policies • Important information will be “unwritten”

  22. Who Should Audit • HR professionals • Outside consultant • Inside Counsel • Outside Counsel

  23. Using Attorneys • May utilize some privileges • Fact-gathering for purpose of legal advice • Fact of the audit and actions taken likely discoverable • Reliance on recommendation – minimize damages • Purposeful documentation

  24. Q&A THANK YOU FOR YOUR ATTENTION AND PARTICIPATION!

  25. DISCLAIMER This presentation is not legal advice.

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